Question 1 Fiona Sporty uses a purchases journal, a cash payments journal, a sales journal, a cash receipts journal and a general journal. Indicate in which journals the following transactions are most likely to be recorded. Purchased inventories on credit. Sales of inventory on credit. Received payment of a customer’s account. Payment of monthly rent by cheque. End of period closing entries Question 2 Below is information about Lisa Ltd’s cash position for the month of June 2019. The general ledger Cash at Bank account had a balance of $21,200 on 31 May. The cash receipts journal showed total cash receipts of $292,704 for June. The cash payments journal showed total cash payments of $265,074 for June. The June bank…Details
Question 1 Peakhurst Limited had the following trial balance at 1 January 2016: Debit $ Credit $ Cash 200 000 Accounts receivable 600 000 Inventory 700 000 Prepaid insurance 60 000 Prepaid rent 50 000 Equipment 1 000 000 Allowance for doubtful debt 20 000 Accumulated depreciation 200 000 Accounts payable 500 000 Revenue received in advance 100 000 Income tax payable 500 000 Loan 570 000 Share capital 400 000 Retained profits 320 000 2 610 000 2 610 000 You are given the following additional information for the year ended 31 December 2016: Bad debts of $8000 were written off. It was decided that allowance for doubtful debts should be 4 per cent of accounts receivable. Required:…Details
Question 1 South Hampton University is preparing its budget for the upcoming academic year. This is a specialised private university that charges fees for all degree courses. Currently, 30,000 students are enrolled on campus. However, the university is forecasting a 5 per cent growth in student numbers in the coming year, despite an increase in fees to $3,000 per subject. The following additional information has been gathered from an examination of university records and conversations with university managers: South Hampton is planning to award scholarships to 200 students, which will cover their fees. The average class has 80 students, and the typical student takes 4 subjects per semester. South Hampton operates 2 semesters per year. The average academic staff salary…Details
Question 1 Cotton On Ltd. currently has the following capital structure: Debt: $3,500,000 par value of outstanding bond that pays annually 10% coupon rate with an annual before-tax yield to maturity of 12%. The bond issue has face value of $1,000 and will mature in 20 years. Ordinary shares: $5,500,000 book value of outstanding ordinary shares. Nominal value of each share is $100. The firm plan just paid a $8.50 dividend per share. The firm is maintaining 4% annual growth rate in dividends, which is expected to continue indefinitely. Preferred shares: 45,000 outstanding preferred shares with face value of $100, paying fixed dividend rate of 12%. The firm’s marginal tax rate is 30%. Required: Calculate the current price of the…Details
Question 1 At 30 June 2019, Beta Ltd had the following deferred tax balances: Deferred tax liability $18,000 Deferred tax asset 15,000 Beta Ltd recorded a profit before tax of $80,000 for the year to 30 June 2020, which included the following items: Depreciation expense – plant $7,000 Doubtful debts expense 3,000 Long-service leave expense 4,000 For taxation purposes the following amounts are allowable deductions for the year to 30 June 2020: Tax depreciation – plant $8,000 Bad debts written off 2,000 Depreciation rates for taxation purposes are higher than for accounting purposes. A corporate tax rate of 30% applies. Required: Determine the taxable…Details
Question 1 Asia Pacific Ltd started operating on 1 July 2017 with 12 employees. Three years later all of those employees were still with the company. On 1 July 2019 the company hired 15 more people but by 30 June 2020 only 10 of those employed at the beginning of that year were still employed by Asia Pacific Ltd. All employees are entitled to 13 weeks’ long-service leave after a conditional period of 10 years of employment with Asia Pacific Ltd. At 30 June 2020 Asia Pacific Ltd estimates the following: The aggregate annual salaries of all employees hired on 1 July 2017 is now $1,200,000. The aggregate annual salaries of all current employees hired on 1 July 2019 is now…Details
Cena Ltd purchased 75% of the capital of Lesnar Ltd for $250 000 on 1 July 2003. At this date the equity of Lesnar Ltd was: Share capital $ 100 000 General reserve 60 000 Retained earnings 40 000 At this date, Lesnar Ltd had not recorded any goodwill, and all identifiable assets and liabilities were recorded at fair value except for the following assets: Carrying amount Fair value Inventory $ 70 000 $ 100 000 Plant (cost $170 000) 150 000 190 000 Land 50 000 100 000 The plant has a remaining useful life of 10 years. As a result of an impairment test, all goodwill was written off in 2006. All the inventory…Details
Question 1 Hi Tech Products manufactures three (3) types of CD players: Cheap, Econo and Deluxe. Hi Tech uses an activity-based product costing system. The company has identified five (5) activities. Each activity, its cost and related activity driver are identified below: Activity Activity Cost Activity Driver Material handling $225 000 Number of parts Material insertion $2 475 000 Number of parts Automated machinery $840 000 Machine hours Finishing $170 000 Labour hours Packaging $170 000 Orders shipped Total manufacturing cost $3 880 000 The following information pertains to…Details
“Quick Kip” is a pet store specialising in cat beds. The store is owned and operated by Kat Knapp. The following adjusted trial balance has been prepared at year end but is not in the correct order. Quick Kip – TRIAL BALANCE AS AT 30 JUNE 2020 Debit ($) Credit ($) Cash 16,000 Advertising Expense 1,200 Depreciation Expense – Equipment 4,200 Freight Outwards 3,750 Allowance for Doubtful Debts 3,100 Insurance Expense 3,600 Inventory (1 July 2019) 43,000 General Expense 2,800 Loan Payable 32,000 Rent Expense 6,600 Equipment 16,000 Sales Returns 400 Accumulated Depreciation – Equipment 5,400 Prepaid Rent 1,500 Delivery Van 24,000 Purchases Returns 5,200 Accumulated Depreciation – Delivery Van 4,800 Accounts Payable 22,250 Sales Staff Wages Expense 19,000 Freight Inwards…Details
Accrual Accounting “Great Explorations” is a shop which sells hiking gear, including backpacks, hiking shoes and tents. It is owned and run by Nellie Bly. The following trial balance has been prepared at year end: GREAT EXPLORATIONS TRIAL BALANCE AS AT 30 JUNE 2020 Debit ($) Credit ($) Cash on Hand 12,500 Accounts Receivable 16,000 Inventory (30 June 2020) 32,500 Prepaid Shop Rent 24,000 Shop Shelving 120,000 Accum. Depreciation Shop Shelving 40,000 Bank Overdraft 6,000 Accounts Payable 9,300 N. Bly, Capital (1 July 2019) 141,700 N. Bly, Drawings 12,500 Sales 256,800 Sales Returns & Allowances 1,200 Discount Received 1,800 Cost of Sales 128,000 Sales Staff Salaries Expense 42,000 Advertising Expense 1,800 Discount Allowed 240 Freight Outwards 360 Interest Expense 1,400 Council…Details
Given: The Dowell Company produces and sells brooms. Their present sales volume is 500Kpa., and each broom sells for 0.5$.
Required: If their fixed expenses are 80K$pa. And unit variable cost is 0.3$, calculate the following:
a) The total profit for the year, and the break-even point amount.
b) The new profit if both the fixed costs, and the sales volume increase by 10%,
c) Starting with the values in the given paragraph, what would the new break-even point quantity be, if there was a 10% increase in the selling price, and a 20K$ increase in fixed expenses.
Which of the following is an example of good internal control over cash? Select one:
a. The accounts receivable clerk is responsible for the preparation of weekly bank reconciliations.
b. The accounts payable clerk is responsible for paying all accounts outstanding and can approve payment of accounts of less than $5,000.
c. The wages clerk is responsible for the preparation of wages and salaries payments. The wages are electronically transferred to employee’s bank accounts and are approved by the accountant.
d. The accountant is responsible for approving the purchase of all goods and services, and signs all cheques when payment is due.